ViaSat slides 17% after loss, sub letdown

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Reported by Seeking Alpha:


Aug. 10, 2018 5:26 PM ET|By: Jason
Aycock
, SA News Editor


ViaSat (NASDAQ:VSAT) finished the day 17.1% lower after its losses got deeper in yesterday's Q1 report.

That came as the company continued fixed-cost investments in its next-generation satellite infrastructure as well as business infrastructure "to support anticipated rapid growth across all segments."

Tiny net adds of consumer broadband subscribers (bringing its total to 577,000) were "well below" estimates, Raymond James says, though some of those adds may be backloaded: ViaSat-2 was in service, but "the geographic areas offering the fastest speed plans did not expand until near the end of the quarter (suggesting better adds the rest of FY19)," the firm says.

Shares have fallen 20.5% in 2018 and are hovering just 1.5% over their 52-week low.

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So ViaSat put out lousy plans at high prices and might now be wondering why nobody wants to subscribe.  The plan to reduce congestion by attrition or subscribers migrating to VS-2 is not working out.  People have common sense but ViaSat apparently does not.  They anticipate rapid growth across all segments?  Not likely.  People are not stupid... Why would anyone change plans from VS-1 to VS-2 or subscribe as new that will result in paying more for less?  ViaSat raised the price of business plans by nearly double, removed the unlimited feature from business plans that used to have NO cap during daytime business hours and those things made businesses look elsewhere and there is a lot of "elsewhere" for most businesses to go to. 
  
ViaSat needs cash but messing with people in a way that drops your value 20.5% in 8 months, 17.1% in just one day isn't healthy.  ViaSat's plans and pricing now make people take a long second look into alternatives including HughesNet.  What is attractive about ViaSat's plans right now?  ABSOLUTELY NOTHING.  The long-term plan may be to offer plans and pricing that will be intentionally un-attractive allowing a controlled-fill of VS-2 thereby preventing over-selling, but when nobody wants it, VS-2 will be under-utilized for a long time and ViaSat doesn't have that time or loss of revenue to spare, bills must be paid and employees want their paychecks.  If ViaSat tried to fast-fill VS-2 with subscribers it couldn't be done before the first VS-3 is in operation making the controlled fill of VS-2 a lesson in how not being humble can hurt you.  The saying goes; "There's no such thing as a sure thing," something can always go wrong, even the antennas on VS-2 can attest to that.  Over-confidence sunk the Titanic and ViaSat right now is floating their own version having a mighty satellite that might get lost in space from could-have-been customers abandoning it.

The part I find amusing is "the geographic areas offering the fastest speed plans did not expand until near the end of the quarter (suggesting better adds the rest of FY19)," the firm says.

Who are they trying to kidd?  Does ViaSat really think any day now people will be standing in line to get a crappy plan on VS-2?  Go back and read again where I said People are not stupid. 

Investors aren't buying it either thus the 17% drop in just one day.  Investors sent ViaSat a message.
 


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J&J

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  • ViaSat is over-confident and doesn't understand "Pride goeth before the fall."

Posted 1 month ago

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Oliver

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I got a chuckle out of the part "to support anticipated rapid growth across all segments." so it's paying salesforce more money to do a crappy job managing 600k accounts?   
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J&J

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Notice not just growth but "rapid" growth !   Investors had to be insulted.  We haven't heard Andy say he's so busy doing installs that he doesn't see his wife and kids anymore.  The first VS-3 will be servicing N. America and who is expected to getting on board when it starts up?  The "If you build it, they will come" was just a line in a movie, not a fact of life or human behavior, or accurate.
 
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Old Labs

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People are not stupid...
Experience suggests that's not universally true ;)
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J&J

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You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.

 Abraham Lincoln


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Excellent post J&J! Thanks for sharing.
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Old Labs

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The transcript of the full conference call can be found at:

https://seekingalpha.com/article/4197465-viasat-vsat-q1-2019-results-earnings-call-transcript

Turn off java script for that site and you don't need to subscribe to read the whole thing. Pretty boring call... almost subdued in terms of residential expectations.

(Edited)
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johnny c

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Not too many Igloos with dishes either.
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Old Labs

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Arctic polar routes are now common on airlines connecting Asian cities to North American cities - antarctic not so much. Other non-residential markets also.
(Edited)
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Government installations. Big $$$$$.
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J&J

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Government...?  They may make tons of money there but investors appear to be more interested in residential, caring more about us than ViaSat.  I've known for a long time government contracts don't do much for a credit rating, or investor interest.  It's those "numbers" that matter.  ViaSat could bring in more money from investors than the income from subs if they had the numbers of subscribers.  I'll guess ViaSat doesn't want to depend on investors because when they screw up, investors can walk but residential subs are stuck with 2 year contracts that BTW ViaSat, will conclude, allowing even residential to walk eventually as they seem to be doing right now.
 

 
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My government comment was directed at military installations around the polar areas. Viasat does a lot of work with the government and probably has an obligation to deliver internet where they are told.
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fmj77

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Makes sense that Viasat is losing money. With the launch of V2, they had planned to steal some customers away from those with slower DSL service. Well, that ain't happening. The crappy plans being offered on V2 along with the ridiculous pricing means many of those folks are keeping what they've got.
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Have you compared plans with HughesNet lately? Viasats plan are generally way better. In my area the highest offer Is 20 gigs for $99. Bronze 12 is 40 gigs for $70! And they offer up to 100 gigs vs HughesNets max of 20. Furthermore bronze 12 / 40 is what I had on VS1 and bronze 12 / 40 is available on VS2, for the same exact price. So it was well worth the change to go from 500kbps evenings on VS1 to 5 mbps evenings on VS2. VS2 plans are plenty attractive compared to HughesNet or the service I was receiving on VS1.
(Edited)
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Bradley

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Didn’t know they made that bad of a “gold” plan.
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barg_

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In my area, Hughesnet has a $99 plan ($30 off for 2 years), 50 GB plus 50GB bonus zone, up to 25 Mbps, their highest listed plan. Viasat's cheapest plan is up to 12Mbps, Bronze 12, 35GB total, 360p video, and $100 per month (after 3 months). Not much choice there, HN isn't great, but it works fine, most get the cheapest plan. Nice of Viasat to offer that after having this Exede 5 area closed to new subscribers most of six years (and during that period, most people I know that did have it got fed up with how it worked and switched to HN)....
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Like ViaSat, the HughesNet plans depend on the area.  Some people can still get the 50/50 plans.  

I also find it interesting that so many people discount the 50GB between 2AM and 8AM in the HughesNet plans.  Sure, it's late, but it's there.  And, lets be real.  Compared to many of the speeds I've been seeing lately Hughes' FAP speed isn't bad, and considerably higher than some of these evening speeds I've been seeing on here.  

Don't get me wrong, they both have their advantages and disadvantage, and I'm sure if the VS2 was working as it had been planned to work it would be a different story, but advertised vs reality can be much different things...with both companies.  
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Like ViaSat, the HughesNet plans depend on the area.  Some people can still get the 50/50 plans.  

I also find it interesting that so many people discount the 50GB between 2AM and 8AM in the HughesNet plans.  Sure, it's late, but it's there.  And, lets be real.  Compared to many of the speeds I've been seeing lately Hughes' FAP speed isn't bad, and considerably higher than some of these evening speeds I've been seeing on here.  

Don't get me wrong, they both have their advantages and disadvantage, and I'm sure if the VS2 was working as it had been planned to work it would be a different story, but advertised vs reality can be much different things...with both companies.  
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SMH.  GetSat and its double posts.  
(Edited)
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Interesting thread and stock news. 

I was very busy yesterday so I totally missed this news until I came to this forum tonight. Can't say I'm surprised. 

Andy
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I just got through reading the transcript.......egads was that boring. 

I was surprised that, unless I missed it, not a SINGLE person asked about the huge shutoff that happened with beams on both VS1 and VS2 a couple weeks ago. It was like it never happened. 

I also noticed that the CEO said that they aren't necessarily going for a big increase in subs but ARE hoping to end up with subs that are paying a much higher monthly rate......VS1 customers dump the service but higher paying new VS2 customers take their place. It's all about ARPU. 

Andy
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Churn em and burn em.